May 2011 Supplement: Solving the "Free Shipping" Puzzle

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Once qualified, retailers can place an Eco Responsible Packaging Program logo on their packages. Retailers that need help meeting the program's qualifying criteria can receive tips from the UPS Package Design and Testing Lab. "Retailers have begun to look to their packaging and supply chain to meet their sustainability requirements. We have an array of eco-responsible solutions to help them achieve their goals," says Mansour.

Rural delivery

As much as consumers want packages delivered intact and support retailers that embrace sustainable packaging, their prime concern remains getting their packages delivered quickly, especially if they live in rural areas or have packages sent to a post office box. Working with shipping partners that utilize the U.S.P.S. makes it possible for retailers to cost-effectively reach consumers in rural areas or who request delivery to a P.O. box.

"The U.S.P.S. delivers to every residential address and P.O. box in the country, and some private carriers have surcharges for delivery to those areas," says Streamlite's Routledge. "The deeper packages can be injected into the postal system before final delivery, the lower the rate."

Streamlite, which operates 20 distribution centers around the country, specializes in shipping packages up to five pounds. The company collects, processes and distributes packages for its retail customers and guarantees delivery in five business days or less by leveraging the U.S.P.S. for last-mile delivery. Packages are delivered to the destination postal facilities that provide the optimal balance between transit time and cost.

Once a package arrives at one of Streamlite's distribution facilities it is weighed, sorted, and the shipping label is scanned so that the package can be tracked by the consumer online through the retailer's site or the U.S.P.S. web site. Streamlite's service includes address verification, ZIP code correction, web-based package tracking and optional delivery confirmation.

"One reason we weigh the package is because any deviation from the weight provided by the retailer may mean an item is missing from the order," says Routledge. "If we pick up what are supposed to be 100 two-pound packages and 10 weigh 1.75 pounds, we want to make sure the retailer is aware of it before those orders ship, because an incomplete order leads to customer dissatisfaction."

Retailers can also curtail delivery of fraudulent orders. "If a retailer identifies a spurious transaction, we can easily locate and pull the bad package out of the delivery stream and return it to the retailer before it's injected into the U.S.P.S. mail stream," says Routledge. "Our mid-stream package retrieval capability gives retailers additional protection from the losses associated with fraudulent transactions with a simple phone call or e-mail to us."

The more work a fulfillment partner can do to presort items in advance of handing them off to the U.S.P.S. or reduce the number of zones through which a package has to cross, the more economically retailers can ship. Innotrac will presort packages to be delivered by the U.S.P.S. by ZIP code and then deliver those packages to a regional hub that will route them to the local post office for final delivery.

"We can put together pallets or bags full of items sorted by ZIP code, which spares the hub the work of having to do the sorting," says Innotrac's Toner. "Presorting holds down costs with the U.S.P.S."

Zone skipping

For retailers that need to ship a significant volume of packages across the country, choosing a fulfillment partner that will truck them to a carrier's distribution center in the designated delivery zone can significantly reduce delivery costs. The practice, known as zone skipping, reduces the number of zones the package travels through to its ultimate destination and the cost of delivery, without affecting delivery expectations.

Innotrac uses zone skipping as a way to keep carrier costs down when an order cannot be fulfilled within a reasonable distance from its final destination. Innotrac has fulfillment centers in Atlanta; Chicago; Columbus, Ohio; Hebron, Ky. (near Cincinnati); Pueblo, Colo.; and Reno, Nev. "Our centers are located in parts of the country that enable us to reduce the number of zones a package has to travel through for delivery," says Toner. "If need be we will zone skip to keep costs down."

As part of its fulfillment services, Innotrac performs radio frequency verification of the UPC code as the product is picked, order verification at the pack-out station, weight verification before the order is released for shipment, and guarantees a 99.9% on-time delivery and error-free accuracy rate.

Automated fulfillment

Before retailers can concentrate on getting packages delivered quickly and cost-effectively to consumers, they first need to be able to fulfill orders with that same level of efficiency. The more automated the fulfillment center, the faster orders can be picked, packed and verified before they ship.

In 2010, SpeedFC invested significantly to upgrade its Columbus facility, installing new automated material handling systems, including a packing loop conveyor and shipping sorter to increase order handling.

"Better automation makes it possible to pick, pack and ship an order received by 3 p.m. the same day, which significantly reduces delivery time," says SpeedFC's Zisk. "Fulfillment is all about efficiency, and continued investment in more advanced automation makes it possible to continually increase efficiency."

As more e-retailers expand their global footprint to grow sales, they are discovering they must contend with new delivery issues. Filling out the proper paperwork to ship a package cross-border, figuring total landed costs and collecting duty and taxes are some of the issues with which retailers must contend when shipping internationally.

"Having a partner that understands the requirements involved with international shipping so that packages are not rejected and that makes sure duty and tax are collected at the time of delivery is a big plus for retailers growing their business outside the U.S.," says Zisk. "We have the services retailers need to help them ship to over 80 countries."